Penn Entertainment lays off 100 employees to boost ESPN Bet

Jade Denosta July 19, 2024

Around 100 employees at Penn Entertainment have been made redundant as the company ventures on major strategic changes to focus on digital sports betting. This shift in strategy aims to prioritise the growth and development of ESPN Bet, its digital sports betting platform.

The decision to streamline operations and improve efficiency comes from Penn’s 2021 acquisition of theScore, a major Canadian media and gaming company. This acquisition integrated theScore’s sportsbook platform with Penn’s operations, which has led to the necessar within the company.

“Investors continue to wonder what an ESPN Bet success could look like, and how much more investment it’ll take to reach.”
– Barry Jonas, Senior Gaming
Equity Analyst , Truist Securities

According to an internal email from CEO Jay Snowden, the layoffs primarily target areas directly related to ESPN Bet, indicating a renewed focus on optimising the platform. The company aims to enhance the digital sports betting experience and deepen the integration with Disney’s ESPN, with which Penn has a branding partnership worth $2 billion (approximately €1.8 billion).

The decision to lay off employees and focus on ESPN Bet emphasises the high stakes involved in this decision. While the potential for success is important, the company faces a challenging road ahead. The launch of new ESPN Bet features and the start of the football season will be critical moments for Penn, offering insights into the platform’s effectiveness and ultimately shaping the company’s future trajectory.

Investors’ pressure on ESPN’s progress

The decision to prioritise ESPN Bet comes as a response to pressure from investors and concerns about the platform’s performance. Penn has missed earnings expectations for the past two quarters and adjusted its financial guidance, leading to frustration among investors. Activist investor group Donerail has even suggested that the company’s board should consider selling the entire company, leading to speculation within the industry.

Barry Jonas, an analyst at Truist Securities who has a buy rating on Penn and a price target of $25 (€22.96), remains optimistic about the future of Penn and ESPN Bet. He believes that the upcoming features of ESPN Bet, set to be launched during the football season, will significantly enhance the platform’s competitiveness. Additionally, the recent layoffs are seen as a sign of Penn’s commitment to controlling costs and ensuring the success of ESPN Bet.

However, Penn’s stock price has declined by 25 percent year-to-date, reflecting investor concerns about the company’s direction and financial health. Ongoing concerns regarding Penn’s ability to achieve profitability in the highly competitive sports betting market and uncertainties surrounding the long-term sustainability of ESPN Bet have also been raised.